The rate cut's winners and losers

Winner: Credit card debtors

Because the pricing on most variable-rate cards follows the prime rate, some variable-rate cardholders will enjoy a rate reduction of 0.75 percentage point. A variable-rate cardholder with a low balance, good credit score and history of timely payments stands the most likely to enjoy a favorable rate reduction, according to Greg McBride, senior financial analyst with Bankrate.com.

Most folks would still see a rate cut, says Curtis Arnold, founder of CardRatings.com, but added that he "wouldn't go so far as to say that 90% of consumers are going to get the benefit of that."

Issuers that do pass on the rate cut may decide to re-price your account later, he says. "Even Citibank, who says they are pretty limited in how they'll re-price your account. Back early last year they said they wouldn't re-price based on credit score but if your account expires where they have to cut you a new card, you are subject to having your credit pulled and a re-pricing."

With the median FICO score at 723, most variable-rate cardholders should feel the rate cut soon, but there are some exceptions. Floor rates, risk-based pricing or profitability concerns could prevent cardholders from seeing their rates drop.

"With floor rates, fewer issuers will extend rate cuts to any of the cardholders," says McBride. "This happened in 2001 when the Fed cut rates 11 times. . . . At some point the floor rates kick in because issuers' funding costs don't go below zero and they have to preserve their interest margins. We're approaching the point where we'll see this start popping up."

Examine your credit card agreement to see if it has a minimum rate or call your issuer to make sure.

"Most cards don't have a floor, but a significant number of cards do, so much so you should double-check," says Arnold. He suggests poring through mailed change-in-terms notices for mentions of a floor, minimum rate or phrases similar to "no lower than."

If you have a card with a floor, don't settle for a rate competitors could beat. Arnold suggests calling your issuer to negotiate, and if that doesn't work, consider taking your business elsewhere and transferring your balance to a card that doesn't have a floor.

Take action: Don't give your issuers an excuse to increase your rates. "Manage your credit carefully and keep your credit score in the 700 plus FICO range," says Arnold.

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